I write about the economy, politics, and emerging growth companies for Equities.com. Trying to inject a sense of humor into rooms full of suits.

Aug 30, 2016

Why Don’t We Have Women’s Equality Yet?

Today, August 26th, is an important day: Women’s Equality Day. It was made an official holiday in 1971 to commemorate the day in 1920 when the 19thAmendment, which gave women the right to vote, was enshrined into law. Here at Equities.com, we have made shining a light on the pursuit of gender equalityin the business world a focus, striving to help build a community where our female business leaders can count on getting the same chance to rise on their merits that most men have enjoyed for decades.

So, today we’re going to take a closer look at the one figure that has best come to symbolize the pursuit of women’s equality in the world of business: the gender wage gap. The median income for all women working full-time for a full year is just 78.6% of comparable men as of 2014. That is, however, based on census data and represents a very broad look at a very complicated problem. A wide variety of potential causes begin to come to light as you break the numbers down further.

In 1960, women earned just 60.7% of men, meaning we’ve clearly made progress over the last 50 years. That’s a 30.6% improvement.

That trend, though, appears to have started leveling off around 2002. This appears to be due, at least in part, to the general lack of growth in median incomes for men and women. Women haven’t gotten a raise in over a decade.

Race is clearly another important factor to consider. White and Asian men are clearly the highest earners in the country, but white and Asian women are achieving higher median incomes than Black and Hispanic men.

However, when comparing women of color to white men, the gap is consistently larger, with median earnings for Black women just 60.5% that of corresponding white males, Asian women 83.5%, and Hispanic women just 54.6%.

Occupation, is also a major factor. Depending on industry, the wage gap can fluctuate significantly.

Choice of profession is another driving factor behind the wage gap. Just look at these two lists of the ten highest earning college majors and the ten lowest earning college majors along with their respective gender breakdowns as compiled by the Georgetown University Center on Education and the Workforce:

So there does seem to be some evidence of women gravitating to professions with lower wages but more opportunity to help others and/or do more fulfilling work. Of course, some would argue that this also demonstrates that female work has traditionally been devalued, leading to professions with more women receiving lower wages.

That said, one of the largest contributing factors appears to be cultural norms surrounding family care. Women are still frequently expected to shoulder the majority of the responsibilities in that realm, something that can make it extremely difficult to achieve the highest levels of career advancement.

Wage growth has remained highest among that group of people working 50 hours a week or more. A working mother trying to balance her home life with her work life is much less likely to be able to put in that many hours, making it less likely that women will be able to keep pace with their male counterparts in certain industries after they’ve had children.

Meanwhile, there’s evidence that, prior to having children, women are actually more competitive in the workplace than their male counterparts in many cases. Women are more likely to be college educated than men, making up 55% of student bodies at four-year institutions and receiving 57.4% of Bachelor’s degrees, 62.6% of Master’s degrees, and 53.3% of doctorates.

This highly-educated wave of young women has translated to a reality where in 147 or the 150 largest urban areas in the United States, median salaries for women are 8% higher than those of their male counterparts.

However, over time, having a family appears to neutralize these gains. When looking at the gender wage gap by age, women face a much smaller gap when younger that grows significantly as they enter an age when they are more likely to begin getting married and starting families. Between the ages of 20–24, women earn 92.3% of men, a gap that grows to 81% for the 35–44 age bracket and 77.2% by the 45 to 54 age bracket.

This also points to the creation of a leadership gap at the top of almost every industry. Women who take more time to focus on childcare for a part of their lives find themselves stalling on the corporate ladder.

This becomes clearer when you consider the highest levels of corporate leadership. As of 2014, women made up only 14.6% of executive officers, 8.1% of top earners, and 4.6% of Fortune 500 CEOs.

The S&P 500 shows a similar pattern where each new leadership tier features fewer and fewer women. S&P 500 companies have a labor force that is 45% female, but women make up just 36.8% of first/mid-level managers, 25.1% of executive and senior level management, 19.2% of board seats, and a pitiful 4.6% of CEOs.

This breakdown is especially notable in certain specific industries, as well. The financial services industry has a workforce that’s 54.2% women but has no female CEOs, 18.3% female board members, and 12.4% executive officers. It’s even worse in health care, where the workforce is 78.4% female but there are no female CEOs, 14.6% female executive officers, and 12.4% female board members.

How Do We Achieve Gender Equality?

Decades of progress in closing the gender wage gap appear to have stalled since the beginning of the 21stcentury, an issue that requires the attention of the business community. America has long been considered a land of opportunity, with the desire to create as pure a meritocracy as possible deeply engrained within the culture.

As such, any truly patriotic American should look at the gap in median wages paid to women and men and recognize it as a truly serious issue. Allowing cultural norms surrounding gender to lead businesses to overlook talented women is a detriment not just to those women, but to the businesses they’re working at and our labor force as a whole. If you’re really interested in identifying talent within and without your firm as efficiently as possible, you have to attempt to factor in the way our society has traditionally underestimated the women in its labor force.

When you consider that at least one study found that businesses with women in positions of leadership generated a return on equity 44.6% higher than those without in addition to showing less propensity towards corruption, it should be clear that pushing for women’s equality isn’t just a matter of building a fairer business community, it’s about improving the bottom line.

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